The Supreme Court Rules: Certain Provisions of the Pay Equity Act Are Unconstitutional

June 12, 2018

On May 10, 2018 Canada’s highest court rendered the following two decisions: Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux, 2018 SCC 17 (hereinafter, “APPTSSS”) and Centrale des syndicats du Québecv. Quebec (Attorney General), 2018 SCC 18 (hereinafter, “CSQ”)1. In each of these matters, the Court had to decide on the constitutionality of certain provisions of the Pay Equity Act, CQLR, c. E‑12.001 (“PEA”) in light of section 15(1) of the Canadian Charter of Rights and Freedoms, (the “Charter”) which provides as follows:

Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

(emphasis added)

PEA was adopted by the Quebec government in 1996 in response to the acknowledged prevalence in Quebec of “systemic gender discrimination suffered by persons who occupy positions in predominantly female job classes”2. PEA mandated a proactive regime under which employers with ten or more employees had to undertake, within a prescribed period, “a process of reporting, planning, comparison, evaluation and adjustment payments aimed at ensuring that employers provided equal pay for work of equal value”3.

The APPTSSS decision

The initial version of PEA imposed a continuous obligation on employers to maintain pay equity and to make necessary adjustments in compensation when creating new jobs or new job categories, modifying existing positions or negotiating or renewing a collective agreement.

Ten years after PEA came into force, the government noted that there was only limited compliance with its provisions by employers subject to it. Rather than adopting punitive measures in response, the government elected to make some of the obligations under PEA less onerous, by passing the Act to amend the Pay Equity Act, S.Q. 2009, c. 9 (the “2009 Amendment”), which effectively abolished employers’ continuous obligation to maintain pay equity, substituting instead a system of mandatory audits every five years pursuant to which employers were only required to rectify wages going forward. The issue raised in APPTSSSwas the lack of retroactive compensation for the period between the audits and the salary adjustments, which only applied as of the date on which the audit was posted.

As did the Quebec Superior Court and Court of Appeal, the Supreme Court concluded that the new provisions are discriminatory against women within the meaning of section 15(1) of the Charter, as they “perpetuate disadvantage for women by preserving the pay inequity status quo and providing for up to five years of amnesty for employers”4, since “[a]ny pay inequities emerging during the five year period between audits go uncorrected until the next audit5”. Under section 1 of the Charter6, such an infringement can be justified to the extent that the impugned changes have a pressing and substantial objective, and that the means chosen to achieve that objective are proportionate to it (the “Section 1 Test”). However, given the absence of any “evidence that other means of encouraging employer compliance — such as stricter enforcement of the Pay Equity Act’s requirements through the offence provisions contained within it — would be ineffective”7, the Court confirmed the unconstitutionality of sections 76.3, 76.5 and 103.1 para. 2 of PEA.

The CSQ decision

While female workers applauded the APPTSSS decision, those who work in fields where there are no male comparators, such as daycare centres, were somewhat disappointed with the CSQ decision. The issue the Supreme Court had to decide in that case was “whether Quebec’s approach to implementing pay equity in workplaces without male comparator job classifications violates the equality rights protected by s. 15 of the [Charter]8”. The application of this new approach, which is codified in section 38 of PEA, resulted however in an additional six-year delay for implementing pay equity, with no retroactive compensation for that period. On the basis of that lengthy delay, the appellant unions asked the Court to declare the statutory mechanism unconstitutional.

Contrary to the courts below, the Supreme Court first concluded that there was an infringement under section 15(1) of the Charter, as “[t]he relevant distinction created by s. 38 of the Act is between male employees and underpaid female employees, whether or not those male employees are in the same workplace”9. The Court also indicated that the discriminatory effect of the six-year delay is clear, since during that period “a group of women, [was left], in comparison to male workers, paid less for longer”10.

Despite the apparent discriminatory effect, the Court recognized that the six-year delay was due to the lengthy but necessary research and analysis carried out by the Pay Equity Commission, which led to the development and implementation of a methodology for bringing about pay equity in the employment areas covered by the appeal. This was followed by the equally lengthy but necessary stages of conceiving and drafting the regulation embodying that methodology, and its approval by the executive and legislative branches of government. As the Court states:

Quebec was seeking a wide-ranging and pioneering approach to pay equity for women in workplaces without male comparators. Where, as here, the government introduced, and gave effect to, an entirely new regime, a degree of delay is to be expected.11

Given these circumstances, the Court concluded that the six-year delay was not unreasonable. Consequently, the infringement of section 15(1) of the Charter was justified under the Section 1 Test.

1 The full text of these decisions can be found using the following links: (i) APPTSSS and (ii) CSQ.2 Section 1 PEA3 APPTSSS, para. 14 APPTSSS, para. 225Ibid., para. 336 Section 1 of the Charter: “The [Charter] guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.”7 APPTSSS, para. 518 CSQ, para. 19Ibid., para. 2810Ibid., para. 3311 CSQ, para. 46